Non-farm Self-employment Research Articles

Income inequality of tribal households in Bangladesh: A decomposition analysis

This paper uses field survey data to examine farm and non-farm income to reduce income inequality among tribal households in Sylhet district, Bangladesh. It uses a decomposition method and a regression-based decomposition method to measure income and expenditure inequality by source of income as well as by household and family characteristics. For this, non-farm income was considered as an external transfer of total income to decompose the Gini index and as a potential substitute for farm income, taking into account household preferences. The results indicate that income differences exist between farm and non-farm income, thereby increasing income inequality. The endowment effect on household characteristics was positive and significant, directly supporting the increase in non-farm income per capita daily household expenditure. On the other hand, in terms of its components, non-farm self-employment income reduces income inequality, while non-farm wage income increases income inequality. At the 50th quantile results, an additional year of age of the household head increases the per capita expenditure of farm and non-farm households by BDT 300 to BDT 400, respectively. Moreover, the education of household heads also positively and significantly affects the per capita expenditure of non-farm households. As estimated by the 50th quantile, farm and non-farm households with graduation had higher per capita daily expenditure than household heads with primary education. Raising household education level and total farm household income to a better level, adopting farm-income enhancement programs, and enacting policies to increase alternative income opportunities that will shift income from non-agricultural to agricultural tribal households, reduce income inequality, and bring about the well-being of tribal society.

Drivers of food and nutrition security during the lean period in southeastern Madagascar

The rural population in southeastern Madagascar faces widespread poverty and weak resilience to frequent climate shocks, both contributing to severe food and nutrition insecurity. For effective policy responses and tailored interventions, development stakeholders need to know which factors determine household food and nutrition security status. In particular, the relative contributions of on-farm production diversity versus cash income are of importance since they would suggest different intervention priorities. We collected survey data on household food security and women's diets during the lean season, where improvements are most needed, as well as on households' agricultural activities, market participation, and sources of cash income from 413 randomly sampled households. Regression results suggest that frequent market participation and cash income from non-farm self-employment improve food security, but on-farm diversity does not. Other determinants of household food security include livestock assets and maternal education. Women's dietary diversity, in contrast, is associated only with market participation. The importance of market participation for food and nutrition security reflects the situation in the lean period, when farm production is low and many households' food supply relies, in part, on market purchases enabled by non-agricultural income. Our findings imply that a focus on developing food markets and enabling opportunities for income generation are likely viable strategies for improving the rural food and nutrition security situation during the lean period in southeastern Madagascar. Relatively food- and nutrition-secure households are characterized by their ability to mobilize cash (e.g., from non-farm self-employment) to purchase food.

Does Land Fragmentation Affect Household Livelihood Choice in Rural Vietnam?

This paper examines how cropland fragmentation affects livelihood choice among households in Vietnam’s 12 provinces over the 2008–2016 period. Using cluster analysis techniques, we first classify households into various livelihood clusters. Then, employing multinomial logit regression analysis, we quantify how land fragmentation affects livelihood choice. The current research shows that land fragmentation has a positive impact on nonfarm diversification. Households with a higher intensity of fragmentation have a higher likelihood of pursuing a wide range of strategies based on nonfarm self-employment, wage-earning, or remittance sources rather than specialize in cultivation. Our findings suggest that households actively diversify away from agriculture in response to the disadvantages of land fragmentation. Notably, we discover that such coping strategies provide higher incomes than a cultivation-based livelihood.

Mobile Broadband, Poverty, and Labor Outcomes in Tanzania

AbstractWhat are the impacts of expanding mobile broadband coverage on poverty, household consumption, and labor-market outcomes in developing countries? Who benefits from improved coverage of mobile internet? To respond to these questions, this paper applies a difference-in-differences estimation using panel household survey data combined with geospatial information on the rollout of mobile broadband coverage in Tanzania. The results reveal that being covered by 3G networks has a large positive effect on total household consumption and poverty reduction, driven by positive impacts on labor-market outcomes. Working-age individuals living in areas covered by mobile internet witnessed an increase in labor-force participation, wage employment, and non-farm self-employment, and a decline in farm employment. These effects vary by age, gender, and skill level. Younger and more skilled men benefit the most through higher labor-force participation and wage employment, while high-skilled women benefit from transitions from self-employed farm work into non-farm employment.

The economic burden of non-communicable diseases on households and their coping mechanisms: Evidence from rural Vietnam

In developing countries, the economic burden of non-communicable diseases (NCDs) on households may be very high, especially in rural areas where the social protection and public health care systems are inadequate and underdeveloped. However, there has been very little research on the economic burden of NCDs on households in rural areas. We used two rounds of panel data from rural Vietnam to examine the economic burden of NCDs on households and determine which coping mechanisms the affected households adopted to mitigate these burdens. We employed a difference-in-difference combined with propensity score matching method to account for selectivity bias. Our results revealed that NCDs are associated with higher numbers of labor days lost and lower earned income (particularly, income from non-farm self-employment and wage activities). We also found that the NCD-affected households resort to remittances, sales of assets, and loans in response to NCDs. In addition, households with NCDs in adults tended to experience greater economic burden and adopted more coping mechanisms than households with NCDs in the elderly or children. Our research underscores the importance of measures and policies designed to protect rural households against the economic burden of NCDs.

Welfare impacts of non-farm employment in semi-arid areas: evidence from Burkina Faso

While several studies have linked rural welfare with non-farm employment, the available evidence suggests that whether participation in non-farm employment is welfare improving is intrinsically an empirical question. In addition, the existing literature places emphasis on food and total household expenditure such that there is a dearth of evidence as far as the role of non-food expenditure is concerned. Using household survey data from Burkina Faso, this paper shows that the extent of the impact varies with types of non-farm employment and household expenditure. The results show that participation in wage employment does not affect any type of expenditure. Non-farm self-employment during the dry season increases non-food expenditure but has no significant effect on food expenditure. Non-farm self-employment during both dry and cropping seasons, and total non-farm employment are associated with higher food and non-food expenditures, with higher impact on non-food expenditure. The general pattern of the results suggests that smallholder farmers tend to classify agriculture as the primary source of food while incomes from non-farm sources are preferably oriented towards non-food consumption. From a policy perspective, this shows that promoting the rural non-farm economy will improve welfare in the semi-arid areas. Potential areas of interventions include (i) implementation of the minimum guarantee wage scheme to improve earnings from wage employment and, (ii) development of a vibrant rural credit scheme to improve access to non-farm self-employment.

Welfare Impacts of Non-Farm Employment in Semi-Arid Areas: Evidence From Burkina Faso

While several studies have linked rural welfare with non-farm employment, the available evidence suggests that whether participation in non-farm employment is welfare improving is intrinsically an empirical question. In addition, the existing literature has focused on either food or total household expenditure such that there is a dearth of evidence regarding of types of household expenditure. Using a repeated cross-sectional data from Burkina Faso, this paper shows that the extent of the impact varies with types of non-farm employment and types of household expenditure. We find that participation in wage employment and non-farm self-employment during the dry season increase non-food expenditure but have no significant effect on food expenditure. Participation during both dry and cropping seasons, and total non-farm employment are associated with higher food and non-food expenditures, with highest impact on the latter. The general patterns of the results suggest that smallholder farmers tend to classify agriculture as the primary source of food while incomes from non-farm sources are preferably oriented towards non-food consumption. From policy perspective, this shows that promoting the rural non-farm economy will improve welfare in the semi-arid areas.

Mobile Broadband Internet, Poverty and Labor Outcomes in Tanzania

What are the impacts of expanding mobile broadband coverage on poverty, household consumption and labor market outcomes in developing countries? Who benefits from improved coverage of mobile internet? To respond to these questions, this paper applies a difference-in-differences estimation using panel household survey data combined with geospatial information on the rollout of mobile broadband coverage in Tanzania. The results reveal that being covered by 3G networks has a large positive effect on total household consumption and poverty reduction, driven by positive impacts on labor market outcomes. Working age individuals living in areas covered by mobile internet witnessed an increase in labor force participation, wage employment, and non-farm self-employment, and a decline in farm employment. These effects vary by age, gender and skill level. Younger and more skilled men benefit the most through higher labor force participation and wage employment, while high-skilled women benefit from transitions from self-employed farm work into non-farm employment.

Landholdings, livelihood choices and household income in the Red River Delta, Vietnam

ABSTRACT Land scarcity has frequently been cited as the primary barrier preventing rural households from pursuing better livelihoods in Vietnam and other developing societies. In this paper, we investigate the role of landlessness and landholdings in the choice of livelihoods and in household income in the Red River Delta, the most densely populated region in Vietnam. Using data from the 2018 Vietnam Household Living Standard Survey, our cluster analysis classifies five livelihoods pursued by local households, namely informal wage-earning jobs, formal wage-earning jobs, nonfarm self-employment, agriculture, and non-labor livelihoods. Non-laboring, agricultural, or informal wage-earning households earn less per capita income on average than formal wage-earning or nonfarm self-employment households, according to both descriptive and inferential statistical analyses. Our regression analysis demonstrates that land scarcity is not a significant obstacle preventing rural people from seeking gainful livelihoods in the region. The finding suggests that improving education and supporting non-farm activities should be high-priority government policies for local households with limited land and education. Such policies are expected to help them not only transform their livelihoods but also improve their economic well-being.

Mancala board games and origins of entrepreneurship in Africa

This study examines the correlational relationship between the historical playing of indigenous strategic board games (also called mancala) and the socio-economic complexity of African ethnic groups as well as the incidence of entrepreneurial pursuits. Anthropology literature suggests that these games may be associated with socio-economic complexity of the ethnic groups—the so-called games in culture hypothesis. I revisit this hypothesis with better data and motivated by anecdotal evidence, introduce a contemporary hypothesis, origins of entrepreneurship hypothesis—that descendants of societies that played complex mancala games are more likely to be engaged in non-farm self-employment today. I compile the first comprehensive database of mancala games in Africa matched to ancestral characteristics data, and for 18 African countries, to the Afrobarometer survey data. Using historical and contemporary data, I do not find evidence for either hypothesis. Despite the null results, I explore how related hypotheses and studies can build on the comprehensive mancala database.

Determinants of adoption of modern rice varieties in rural Vietnam: a double-hurdle approach

PurposeThis article aims to examine the determinants of farmers' decisions on the adoption of modern rice varieties in two stages, including whether to adopt and, if so, how much to adopt.Design/methodology/approachThe Double-Hurdle and Tobit models are applied to determine whether farmers make their two-stage decisions separately or simultaneously.FindingsThe findings reveal that farmers make their decisions on the probability of adoption and the intensity of adoption separately. Ethnicity, agricultural labor, land, rice production asset and non-farm self-employment are determinants of the farmers' decision on the adoption of modern rice varieties in both stages. Previous adoption, gender and an irrigation program only have a significant effect on the farmers' probability of adoption, while the market only significantly explains the farmers' decision on the intensity of adoption.Research limitations/implicationsDue to the unavailability of data, this article does not include the attributes of the rice varieties or farmers' perception about the varieties in the model.Originality/valueThe uniqueness of this research is that it attempts to examine the determinants of farmers' two-stage decisions on whether to adopt and how much to adopt the modern rice varieties by application of the Double-Hurdle method.

Remittances and Non-Farm Self-Employment Among the Left-Behind: Evidence from Nepal

We estimated the impact of remittances from international migration on the labor supply of left-behind household members to non-farm self-employment and on the performance of the non-farm enterprises they operated. We used data from a nationally representative household survey from Nepal that included an enterprise module. We accounted for both the truncated nature of observed hours worked and the endogeneity of remittances when assessing the impact on labor supply, and, in estimating the effects on firm performance, we addressed selection into operating a non-farm enterprise as well as the endogeneity of remittances. Remittances were found to encourage women to reduce their labor supply in non-farm self-employment, whereas there was no significant effect on men. We found evidence that the disincentive effect was strong enough to exert a negative influence on the revenues of non-farm enterprises operated by the left-behind labor force.

Land Rights of Women: A Study of Andhra Pradesh and Telangana States, India

Empowerment of women takes place through structural changes in women’s lives such as provision of land rights, promotion of non-farm employment, self-employment and support to unleash their potential of entrepreneurial qualities and their participation in decision making at various levels. The initiatives undertaken by the Government such as promotion of rural livelihoods (NRLM) and wage employment (MGNREGS) resulted in enhancement of livelihoods and economic freedom to women. The need for the study arises from the fact that ensuring effective and independent land rights for women is critical as it can serve multiple functions in rural women’s lives and empower them to challenge the socio-economic and political inequalities prevalent in rural semi-feudal society. The present study while looking at the situation of land rights of women covered five districts from two states, examined the efficacy of ‘Bhoomi’ initiative and studied the processes of securing land rights by eliciting the perceptions of stakeholders in a non-survey method supported by secondary data. The data from Society for Elimination of Rural Poverty of state governments established that the para-legal assistance strategy and Bhoomi Nyaya Sahaya Kendram initiative helped poor women to secure land rights and improve their status significantly. The study found that the initiative of land purchase by the government helped poor women to access land while gender mainstreaming in government departments was a felt need. It is a classic example of ensuring land rights of poor women and thus improving their status and livelihoods among others.

Effect of off-farm income on multi-dimensional poverty among rural farm households in Nigeria

PurposeThe purpose of this paper is to analyze the effect of the different components of off-farm income on multi-dimensional poverty. Furthermore, the study aims to measure multi-dimensional poverty and also identify the determinants of multi-dimensional poverty in Nigeria. The paper reveals the different contributions of the dimensions of education, health and living standard.Design/methodology/approachThe study focuses on rural farm households in Nigeria. Data are obtained from the Nigeria General Household Survey, 2013. The survey covers both urban and rural areas of the 36 states of Nigeria. Owing to the interest of this study in the rural farm household’s sub-sector, a nationally representative sample of 836 rural farm households are selected for the study after the data merging process. Rural farm households in this paper earn 50 percent of their total income from crop and livestock production. The paper employs the Multi-dimensional Poverty Index (MPI) to measure multi-dimensional poverty across the six different geographical zones of Nigeria. The probit regression model is used to estimate and analyze the effect of off-farm income components on multi-dimensional poverty and also to identify the determinants of multi-dimensional poverty.FindingsThe results of the study show that among the off-farm income components, the non-farm wage income and non-farm self-employment income have negative association with multi-dimensional poverty. Findings show that multi-dimensional poverty is high in Nigeria with deprivations in health contributing the most. Northern Regions have a higher estimate. Results reveal that sex, age, number of adults, formal credit access, access to extension services and location characteristics are key determinants of multi-dimensional poverty. The MPI for Nigeria averaged 47 percent. Across regions, deprivation in the health dimension contributes about 44 percent to multi-dimensional poverty. Deprivation in living standards contributes 40.5 percent, while deprivation in education contributes 15.5 percent to multi-dimensional poverty.Research limitations/implicationsDue to the nature of the data used, the health indicators (nutrition and child mortality) are absent but proxies are used instead. Future research could introduce gender dimensions.Practical implicationsImproving the involvement of rural farm households in non-farm self-employment sector could improve their livelihoods and prevent migration to urban centers, especially among the youths.Social implicationsImproving the quality of health, education and living standards will lead to lower poverty levels in Nigeria. Farmers can best reduce their multi-dimensional poverty by engaging in more off-farm jobs.Originality/valueThis paper provides information to policy makers on the effect of different components of income from the off-farm sector on multi-dimensional poverty alongside with the determinants of multi-dimensional poverty at a national level for the rural farm households. By using MPI, the contribution of the different dimensions used in computing the MPI across the six geographical regions within the country is revealed. This provides policy makers with more information for development purposes.

Moving Up or Just Surviving? Non-Farm Self-Employment in India

The classical economic development literature argues that growth is accompanied by a reduction in agriculture's share and an increase in non-agriculture's share of employment. Yet, growth of the non-farm sector does not necessarily signal increasing levels of development, as the sector may serve as subsistence employment for many individuals. This ambiguity is heightened by a surprising lack of microevidence regarding sectoral and occupational choice and, especially, how government policies impact these decisions. In this paper, I make a simple observation regarding how non-farm self-employment reacts to market conditions: households and individuals that enter into non-farm self-employment for subsistence reasons are more likely to exit the sector when wages increase or when more stable employment becomes available. With this assumption as a starting point, I examine the effects of the Mahatma Gandhi National Rural Employment Guarantee Act, which increased prevailing wages in rural India. I find that the program significantly decreases days spent in non-farm self-employment. In addition, the implied labor elasticity is almost three time higher than economy-wide estimates, suggesting rural non-farm self-employment is a sector of last resort for many individuals. Additional analyses suggest this impact is driven primarily by two mechanisms: higher wages and alternative options for risk-management.

Determinants of non-farm employment and non-farm earnings in Ecuador: Cristian Vasco and Grace Natalie Tamayo

This article analyses the determinants of both participation in non-farm employment and nonfarm earnings in Ecuador. Using the Dubin-McFadden two-step estimation method, the results show that women are more likely than men to engage in non-farm self-employment but earn significantly less than men employed in the non-farm sector. Non-farm wage employment is a common choice among more educated individuals in landless households, while farm wage employment seems to be the only source of employment for uneducated landless people. Participation in non-farm work is more likely in areas located near medium-sized cities with dynamic economies. Finally, there are regional differences in employment patterns which appear to be associated with both the availability and the quality of land. This information is relevant in relation both to rural population growth and to the continuous process of land fragmentation in rural Ecuador.

Composition of Household Income and Child Nutrition Outcomes Evidence from Uganda.

This study targets the empirical space between cross-country analyses exploring links between income and nutrition without insights on micro-level determinants, and relevant microeconomic studies hindered by small sample size and/or incomplete data. We use the rural samples of the three waves of the Uganda National Panel Survey, and estimate panel regressions of child height-for-age z-scores (HAZ) controlling for time-invariant child-level heterogeneity. On the whole, we find no impact of short-term changes in total gross income on HAZ but document small positive correlations for younger children. Sector-differentiated analyses indicate that compared to wage earnings, only share of income from non-farm self-employment correlates positively with HAZ. Within agriculture, shares of income from consumption of own crop production and from low-protein crop production underlie the negative effect of share of income from crop production. While we cannot claim causal relationships, our findings suggest the possibility of "stickiness" of crop production to own consumption.

Determinants of Non-farm Micro and Small Enterprise Participation in Rural Ghana

The non-farm sector is critical for the socio-economic development of Ghana especially the rural poor. Literature suggest that people engage in non-farm enterprises as a way out of poverty or a survival strategy, perhaps as a substitute for the landless. This paper analyses the determinants of individual participation in non-farm enterprises and the intensity of participation. The paper uses EGC/ISSER Socio-Economic Panel Survey data collected in 2009. The paper estimated the determinants of participation using a probit model and then estimated the intensity of participation using a truncated regression model. The results indicate that majority of women (about 73%) are engaged in non-farm enterprises in rural Ghana. The study found that females tended to participate more in non-farm self-employment and are less likely to participate in non-farm wage employment. The results further showed that individual characteristics such as the gender of the individual, being head of a household, being the spouse of a household head, having formal education, age of the individual, having access to credit, possessing a mobile phone, per capita landing holding and ownership of livestock influenced the participation of individuals in self-and wage employment. Results from truncated regression model for self-employed enterprises showed that having access to mobile phones, owning more livestock and electricity are important in determining the intensity of participation in self-employed enterprises. For wage-employment, being a household head, spouse of household head, having access to mobile phone and owning more livestock increased the number of days working on wage employment. Education is relevant for employment in the non-farm sector especially wage-employment. Government should play a lead role in making formal education accessible to the rural people. Deliberate policies should focus on addressing critical factors such as access to credit, mobile phone, electricity and education which are relevant for increasing participation intensity in rural enterprises.

Promoting rural non-farm self-employment through the private sector participations: An overview of Bangladesh experience

Proshika is one of the largest national NGOs in Bangladesh working with the landless and poor farmers. The organization's strategy for human development is structured around organizing its clients into groups and providing them with training, technical assistance, credit, input supply and marketing support. Nearly half the population of Bangladesh is women. They are considered a disadvantaged group as the majority of them are illiterate and have low social status because of many social and religious taboos. Due to a lack of employment opportunities in this male-dominated society, women have no source of income and often suffer from malnutrition. Because of this, women were given special attention for development through Proshika's programmes. The very word “PROSHIKA” is an acronym of three Bangla words (for training, education and action) and this encapsulates the organization's development ethos. Finally, a strategy for non-farm development must recognize the links between non-farm activities and agriculture.

Impact of Nonfarm Activity on Rural Income Inequality in South 24 Parganas District of West Bengal§

The impact of non-farm activity on rural income inequality in the South 24 Parganas district of West Bengal has been studied. The non-agricultural activities play a key role in shoring up income and employment opportunities for the rural work force in this district. The average annual income of nonfarm families ( 108662) is almost double to that of farm families ( 56081). The results of Gini coefficient decomposition have indicated that nonfarm income is the largest component (44.05%) of total income, followed by farm income (39.41%). The non-farm income contributes largest to the overall inequality (58.27%) in which non-farm self-employment activity increases the total income inequality, while non-farm wage employment decreases it. The analysis of factors influencing participation of households in different income generating activity showed that human capital endowed with formal and informal education are engaged more in nonfarm activities. The study has suggested development of both farm and non-farm sectors simultaneously to reduce rural income inequality.